2 - ECONOMIC Profile
Garowe City is having All sorts of goods and services; such as basic foodstuffs, clothes, household utensils, fruits and vegetables, milk & meat, jewelry, currency exchange, blacksmiths among others. Women are the main breadwinners for many Garowe families; leaving men to exchange money and trade in clothes and shoes. The main trading activities in Garowe municipality are carried out at the city market, within the main market area and along the main tarmac road.
This economic boom has greatly benefited the city residents who own rental properties around the market.
Income levels: Poor economic performance and excess labour supply creates a situation where wages remain extremely low (indirect employment).
2.3. POVERTY AND INEQUALITY
Poverty is widespread and about 87% of the population live on less than US $1 a day. The average per capita income in Nugaal is US $150 – 200 per annum. There are striking inequalities between urban and rural areas. The rate of unemployment is estimated at 69% in urban areas and 99% in rural areas. Since the period of state collapse and civil war, the private sector has increasingly assumed the responsibility of service provision and the trend is continuing. Barriers to investment flow include massive poverty, which limits household savings and investment, and poor infrastructural facilities and access. Pastoral and nomadic communities dominate the poverty-stricken.
Poverty mappings -To provide ethnic, gender, and generational distribution of poverty.
rate capacity makes earning livelihoods very difficult.
international agencies operating in the municipality and will help establish a coordinated work plan.
2.4 EMPLOYMENT AND ECONOMIC ACTIVITY
Due to being the Political seat of the State, most of the income is derived from the Government and Non-Governmental Organizations (NGOs) activities.
The main economic activities and income opportunities in the district include:
- Export and slaughtering of livestock
- Import of foodstuffs and other commodities
- Wholesale, retail and distribution of imported foods and other goods
- Remittances from the Somali Diaspora
- Energy (petrol imports and distribution)
- Telecommunication services
- The Khat market
- A wide range of services offered by small-scale enterprises (welding, carpentry, health care, domestic work etc).
- Others (mainly NGOs)
Table 9: Basic information on Businesses activities
Major Industries | Percentage |
Livestock trade | 18% |
Trade & Distribution | 29% |
Education | 14% |
Telecoms | 4% |
Financial services | 5% |
Others (mainly NGOs | 30% |
Total | 100% |
Source: Garowe Local Municipality
Observation: Livestock and trade & distribution remain the dominant economic activity at 18% and 29% respectively, the later as a result of Garowe’s central location and seat of regional Government. Government and the Nongovernmental Organizations also play an important socio-economic role. However, the private sector especially telecoms and financial services has tended to thrive against obvious odds. Big players in this sector include: Golis Telecoms, Somtel, Dahabshiil among others.
The Social Business sector has also given a good account of itself despite working in extremely difficult circumstances especially in the Education and health sectors. Governmental Organizations and the local Government, however, still remain the major employers. The private sector controls most of the services and infrastructure, such as the postal and telecommunication services, the energy sector (petroleum and electricity) and other income generating activities.
The process of urbanization can be a positive driver of development in various ways, but it needs to be managed.
In order to facilitate this, data on the prevailing situation in an urban centre is needed in order for efficient planning and policy making particularly in the area of revenue collection system and management.
The current revenue structure in Garowe town is not yielding much due to the inherent weaknesses of the revenue collection system and management. This is mainly due to inadequate tax assessment mechanism, classification and coverage.
In order to widen the revenue base and stabilize the revenue of the municipality, Garowe municipality needs to focus on issues of strengthening its data collection and information management such as examination of revenue sources, business classifications, identification and examination of existing revenue sources, and identification of potential sources of revenue. These will enhance revenue generation and will facilitate better decision-making capacity.
Registration of businesses with the Municipality should be a pre-requisite for the establishment of all kinds of businesses. The legal framework (that is regulations and by-laws) supporting district businesses must be in place and taxation policy should be made clear and available to all business owners.
Table 10: Average Business lifespan
Business lifespan (in years) | Percentage |
Less than 3 | 49 % |
3-5 | 27 % |
5-7 | 14 % |
Over 10years | 10 % |
Total | 100.00% |
Source: Garowe Local Municipality
Observation: 76% of the Small Businesses which employ less than 10 employees close shop within 5 years of formation. Considering that they employ over 60% of the population, their main cause of failure which has been identified as lack of Business skills and insufficient capitalization should be addressed as a matter of urgency.
2.5 MAIN CUSTOMERS FOR PRODUCTS/SERVICES
Table 11: Main customers for products/services
Product/Service Destination | Percentage |
Within district | 30 % |
Within state | 42 % |
Beyond State | 28 % |
Total | 100% |
Observation: Only 30% of the trade is conducted within Garowe District due to its small population while 42% is Business within the region including southern Somalia and 28% translates to Business with other Countries mainly Ethiopia. The Arab Countries mainly import Livestock export through the port of Bossasso and increasingly imports foodstuff from Indian sub-continent and consumer goods
Table 12 : Employment /unemployment
Source of Income | Percentage |
Employed for salary | 10 % |
Self employed | 20 % |
Unemployed | 61 % |
Retired | 6 % |
Unable to work | 3 % |
Total | 100% |
Source: Garowe Local Municipality
Observation: As in most third world economies, the unemployment situation at 61% is untenable, in the case of Garowe it is especially exacerbated due to the influx of IDPs from southern Somalia and poor economic performance as a result of lack of Government inputs. The harsh climate, exacerbated by effects of Global warming has also contributed to the fact that many Livestock farmers were put out of their works. 61% Unemployment is extremely high by all standards. This is especially so considering that even those who are employed are mostly under-employed and/or grossly underpaid and work in poor conditions.
2.6 : INCOME LEVEL AND REVENUE
The District expenditures abide by the budget but as a result of unforeseen circumstances such as receiving high level delegations the planned budget could not be implemented accordingly. But as far as these unforeseen issues concerned and made great change to the finance strategies o f the section is the best interns of performance and this could beat tribute to the AIMS and BIMS systems can jointly be implemented by UN-Habitat and Terre Solidali. There was a weak procurement planning process
Table 13: Revenue & Expenditure of Garowe Town: 2018 (So. Sh)
Months | Revenue (SSH) | Expenses (SSH) | Difference (SSH) |
Jan | 1,164,652,000.00 | 1,288,174,040.00 | – 123,522,040.00 |
Feb | 1,008,829,000.00 | 767,122,580.00 | 241,706,420.00 |
March | 1,108,148,000.00 | 1,015,861,960.00 | 92,286,040.00 |
April | 1,328,186,000.00 | 1,292,749,720.00 | 35,436,280.00 |
May | 1,761,563,000.00 | 2,121,067,160.00 | – 359,504,160.00 |
Jun | 952,264,000.00 | 2,121,067,160.00 | – 1,168,803,160.00 |
July | 1,267,467,070.00 | 2,023,069,460.00 | – 755,602,390.00 |
Agust | 1,267,459,000.00 | 2,321,745,200.00 | – 1,054,286,200.00 |
Sept | 1,267,459,000.00 | 2,121,067,160.00 | – 853,608,160.00 |
Oct | 1,761,563,000.00 | 2,023,069,460.00 | – 261,506,460.00 |
Nov | 1,967,459,000.00 | 2,525,007,160.00 | – 557,548,160.00 |
Dec | 2,261,563,000.00 | 2,023,069,460.00 | 238,493,540.00 |
Total | 17,116,612,070.00 | 21,643,070,520.00 | – 4,526,458,450.00 |
Source: Garowe Municipality
Key economic activities of Garowe include livestock and farming. Trading with Ethiopia and other parts of Somalia acts as a catalyst for the economy as well. Other major business activities in the district include telecommunications services, financial services and the hospitality industry.
However, the informal sector remains the major driver of the Garowe’s economy, employing over 69% of the district’s residents. Despite the significance of this sector, little effort is being directed towards its development by the government and other developmental agencies.
Major challenges for this crucial sector include lack of business skills and capital.. These challenges have made it difficult for these enterprises to grow and graduate to the formal sector, where they could greatly contribute towards the national economy in terms of taxes and employment.
Income levels: Poor economic performance and excess labor supply create a situation where wages remain extremely low.
Figure 4 Business life-span distribution
From the findings, 76% of the small enterprises employing less than 10 people cease operating within 5 years of formation. Despite employing over 60% of the population, their main cause of failure has been attributed to lack of business skills and insufficient capital.
Figure 5 Employment status for Garowe population
The unemployment situation at 39% is untenably high. In the case of Garowe, the situation is worsened by the continued influx of IDPs from southern Somalia and the general poor economic state. The harsh climate, combined with effects of global warming has also put livestock farmers out of work.
As the capital city of Puntland and with the high number of UN agencies in Garowe, there is a pull effect on youth towards the city either in search for education or employment. Garowe town has shown positive levels of economic growth, a growth rate of 135% in 5 years, effectively making Garowe the fastest growing urban centre in the Puntland region. Nevertheless, The level of skills possessed by most job seekers is still low and the need for TVET colleges is enormous. High levels of unemployment, especially among the youth, remain a pervasive problem driving conflict and youth involvement in militant groups.
Figure Employment by Sector in Garowe
The study also noted that Macro and Micro enterprises employ over 60% of the Garowe’s workforce through various commercial outlets such as pharmacies, shops, private educational institutions and farming, more so livestock farming. With a fast-growing population and changing lifestyles, small enterprises and education may be the key to future investment for the city.
It was further established that only 30% of the trade is conducted within Garowe district while 42% of the business is conducted with other regions including southern Somalia; another 28% of the town’s business is with other countries mainly Ethiopia. The Arab countries import the district’s livestock through the port of Bosaso. The district increasingly imports foodstuff from India and consumer goods from China.
2.7: Key Sectors – sectors with identified growth potential
Livestock sector
There are two main livestock markets in Garowe town that cater for the surrounding pastoral livelihoods of Nugaal, Caduun and Hawd. Apart from livestock sales the market provides employment opportunities to livestock brokers. Two markets (suuqa xoolaha and Suuqa Injiga) are the main points for livestock trade. Suuqa xoolaha, the older market, is located outside the town and is the main camel and cattle trading point. There are other informal places of livestock trade, mostly for export of quality sheep and goats. Suuqa Injiga livestock trading market is located in the centre of the town (Hodan section) and is used for the sale of small ruminants.
Livestock export volume in Garowe town fluctuates with seasons and demand. The export volume for goat and sheep from January to December 2010 was 1,500 herds per month, of which 75 percent were goats and 25 percent, were sheep. The herd describes an undefined number of animals. The export volume for November-December 2010 declined to 1,000 herds per month (33 percent less) due to low livestock supply because of persistent droughts. Despite the decline in livestock export volume, there was an increase in the price of goats (from SoSh 1,240,000 to So;sh 1,395,000 per herd). About 60 camels were exported per month (not sold directly from Garowe market). Demand for goat/sheep animals peaked in August-October as a result of Ramadan and Hajj festivities. This increased goat/sheep export volume to 6,000 heads in the three months. About 200 to 250 cattle that were exported through the port of Bossasso to Saudi Arabia, United Arab Emirates and Yemen in the reference (Garowe Urban Baseline Report May 17, 2012 FSNAU )
Industry sector:
Industry Today, the sector comprises mostly privately-owned manufacturing and construction subsectors. The industrial enterprise base is at its embryonic stage of development, mainly composed of a growing number of recently established, small-scale manufacturing factories. While a vibrant group of entrepreneurs owns most of these factories, others are established under the strict ownership and management of cooperatives formed by local communities. The construction boom is clearly seen in Garowe.
Infrastructure:
Garowe is traversed by the highway that links major urban areas in northern and southern Somalia. This asset has spurred economic activities and transformed Garowe to a small to medium-size town. Garowe has major health institutions (Garowe Regional Hospital and private health clinics), housing facilities for international organizations, an orphanage, Garowe Airport, a stadium, religious institutions, primary and secondary schools, East Africa University, Garowe Teachers Education College and Puntland University. Garowe town has poor road networks. The main trunk road is linked to various primary and secondary feeder roads that connect to various parts of the town. The airport facilitates both international and domestic travel.
Telecommunication is provided by the private sector and most HHs in own mobile phones. Electricity is mainly supplied by public sector and private generators.
Service sector: Private sector services have expanded, while public services lag behind due to meager fiscal resources and low capacity. Private sector services comprise wholesale and retail trade, hotels, restaurants, transport and communications, financial services, etc .
2.8: Economic competitiveness of the District
Garowe connects the three regions of Somalia, namely Somaliland, Puntland and the South Central
It is the capital city of Puntland State and also the base of parliament. This has conferred economic privileges as well as enhanced security.
There are confirmed mineral and oil deposits
Presence of university and the NGOs ensure that the qualified human resource is utilized
An international airport
Good town planning and internal road networks
Livestock and agricultural development